No Second Hand EVs in China Unless It’s Tesla

The electric journey started 5 years ago in China and this is close to 3.5 million EV cars sold, Tesla is the giant here. Tesla’s is a car for value even after using the car for a year the equivalency at one year is more than 70% of its original price, far higher than the value of any Chinese EV model at the same mark, This is according to an August report from a Chinese automobile industry group studying leasing and resales.

While the second-hand EV market is just starting in China, it’s an important step for electric vehicles by assuring buyers with reliability. Prices for used cars can affect the first-hand market, since people are more likely to buy cars that hold on to their value. Due to the lack of transaction volume, it’s hard to track used EV sales, but the numbers are likely small and hybrids are probably preferred. On Youxin, one of the biggest second-hand car websites in China, there are no pure-electric EVs offered at the moment, while a search on online used car site Guazi found 81 EVs out of thousands of cars.

A three-year-old 480 km (300 miles) Model S which has logged more than 38,000 kilometers (about 24,000 miles) which costs $66,908 on Tesla’s own Chinese site, or nearly 60% of the price of the current Model S with a range of 660 km. Meanwhile on Guazi, BYD’s popular compact SUV, Song, is listed for $16,903, or 40% of its original price in 2017.

That’s a worrying sign for China, where government subsidies have created a slew of domestic EV giants (Quartz member exclusive), some of which are now looking to go overseas amid a slowing car market. The Chinese EV with the highest value at one year was a sports utility vehicle from Roewe, a subsidiary under state-run SAIC Motor, while for many popular brands it’s under 35%.

Tesla's high import duty in China might have led people to opt for Model 3 because it is a bit cheaper. The residual value of EVs drops far more quickly than gasoline cars, which can stay at about 60% to 75% even after three years. The typical profit for a dealer is also far lower, or below $423.

That’s due to the more limited range of the first generations of EVs, and the perception of high risk due to consumer reports of frequent repairs with their new EVs and spotty after-sales service. Most of the second-hand EVs on sale in China are about two to three years old, according to online searches, which means they typically have a battery range of just 200 km (124 miles) — or about two-thirds of typical ranges for a new car today.